Hostess to Mediate With Union

A Hostess Twinkies sign is shown at the Utah Hostess plant in Ogden, Utah, on Nov. 15. The company said it will hold talks with its bakery workers' union today. (RICK BOWMER | THE ASSOCIATED PRESS)

By DAWN MCCARTYBLOOMBERG NEWS

Published: Monday, November 19, 2012 at 10:00 p.m.

Last Modified: Monday, November 19, 2012 at 10:00 p.m.

WILMINGTON, Del. | Hostess Brands Inc. will hold talks with its bakery workers' union today to explore the reasons for a strike that the maker of Twinkies and Wonder bread said will force it to liquidate.

U.S. Bankruptcy Judge Robert Drain said Monday at a hearing in White Plains, N.Y., that there are "serious questions as to the logic behind the decision to strike." He urged the company and the union to enter mediation, citing the potential loss of more than 18,000 jobs.

"I believe that mediation really only works if the parties are willing to do it but I'm also strongly suggesting that the parties should be willing to do it," Drain told lawyers for the company and its bakers' union. "To me not to have gone through that step leaves a huge question mark over this case which I think will only be answered in litigation."

Hostess hasn't spoken with the union since August, a company lawyer said. Hostess is seeking permission from Drain to pay bonuses to key managers while closing operations that will leave most of its 18,500 workers unemployed as it begins a liquidation that may attract bids from private-equity firms and rivals.

Hostess said Friday that it would shut down, claiming that a weeklong strike by the bakers' union forced liquidation. The union blamed management's concession demands, while some employees blamed both sides. Strikers were still outside the company's facilities Monday, Hostess's lawyers said.

Drain said courts have established that the law doesn't prevent monetary claims against a union for a strike that's unlawful or improper. Discovery may bring out what was said to Hostess's competitors and prospective buyers, he said.

"A decision in essence to accept the termination of 6,000 jobs and what appears to me the inevitable reduction of recoveries at least raises issues as to why it was made, particularly when there was no attempt made to contest the terms that were imposed," Drain said.

"I'm giving the union as well as the debtors and their lenders a last chance to try and work those issues out in private," the judge said. "If they don't take it, it's not as if they won't be worked out. They will be worked out but they will be worked out in public and I believe ultimately in a expensive way."

<p>WILMINGTON, Del. | Hostess Brands Inc. will hold talks with its bakery workers' union today to explore the reasons for a strike that the maker of Twinkies and Wonder bread said will force it to liquidate.</p><p>U.S. Bankruptcy Judge Robert Drain said Monday at a hearing in White Plains, N.Y., that there are "serious questions as to the logic behind the decision to strike." He urged the company and the union to enter mediation, citing the potential loss of more than 18,000 jobs.</p><p>"I believe that mediation really only works if the parties are willing to do it but I'm also strongly suggesting that the parties should be willing to do it," Drain told lawyers for the company and its bakers' union. "To me not to have gone through that step leaves a huge question mark over this case which I think will only be answered in litigation."</p><p>Hostess hasn't spoken with the union since August, a company lawyer said. Hostess is seeking permission from Drain to pay bonuses to key managers while closing operations that will leave most of its 18,500 workers unemployed as it begins a liquidation that may attract bids from private-equity firms and rivals.</p><p>Hostess said Friday that it would shut down, claiming that a weeklong strike by the bakers' union forced liquidation. The union blamed management's concession demands, while some employees blamed both sides. Strikers were still outside the company's facilities Monday, Hostess's lawyers said.</p><p>Drain said courts have established that the law doesn't prevent monetary claims against a union for a strike that's unlawful or improper. Discovery may bring out what was said to Hostess's competitors and prospective buyers, he said.</p><p>"A decision in essence to accept the termination of 6,000 jobs and what appears to me the inevitable reduction of recoveries at least raises issues as to why it was made, particularly when there was no attempt made to contest the terms that were imposed," Drain said.</p><p>"I'm giving the union as well as the debtors and their lenders a last chance to try and work those issues out in private," the judge said. "If they don't take it, it's not as if they won't be worked out. They will be worked out but they will be worked out in public and I believe ultimately in a expensive way."</p><p>Tom Becker, a spokesman for Hostess, didn't immediately return voice and email messages seeking comment on the mediation.</p>